Mars Ice Cream: Its Strategy and Future

The company Mars Ice Cream has included several strategies into its operation, some are differentiating and some others might have not being so well analyzed, but the truth is that it has certain opportunities which they are not converting into the greatest results and this can compromise its future.

1. Mars Ice Cream´s Strategy

The approach of this ice cream company to the market has been through the use of high quality ingredients to make their products. They established a premium price category in the market place. At the same time, they are using an important advertising support thorough all Europe and have established long standing relationships with grocery trade. Trying to reach even more clients, they adopted the strategy of freezer distribution.

It is clear that the company wants to differentiate from the competition by having high quality, premium products. To increase sales and attract more clients they are targeting supermarkets and small markets and even offering freezers to them.

Now, it is evident that the company is facing several problems regarding high distribution costs, small orders on non-supermarkets stores, and bad businesses with freezers.

In general, Mars Ice Cream has adopted a very similar operating strategy than its competitors. This is being very ironic because their products are different, and their market niche should not be exactly the same.

2. Future About Its Profits

After taking into account the factors detailed above we can infer that something is not going well and that probably if they don´t change their strategy, the company´s results will not have a great outcome.

On one side we have the current strategy of the company. I believe that Mars Ice Cream has not defined its “audience” or market niche correctly or at least is not acting according to it. I think that by having a specialized product they should focus in certain type of supermarkets or stores which can offer those premium products to that specific market segment only. But if what they want is to diversify their type of clients, they should also diversify their products with dessert ice creams, bulk ice cream packs or ice creams for children. For me this is one of its biggest mistakes.

Their distribution problems should also be address by changing the strategy, they should open new factories closer to their consumption zones or associate with local companies for other better distribution schemes. The freezer approach can only continue if they expand their product offering, any other way will have very little success.

To change their strategy and adapt to the current needs they should study the external factors currently affecting it, so let’s make a quick analysis of the external factors affecting the company using Porter´s 5 forces:

• Threats of New Entrants: Mars Ice Cream has good distribution contacts, high quality and specialized suppliers; but, at the same time its production its very centralized; all is branded the same and their distribution costs are high which facilitate competition. Grade: Medium.
• Substitute of products: cheaper and not premium products are stealing market; Nestle and Unileve have big market shares and have broader range of products and could easily adopt a premium product approach. Grade: High
• Suppliers Power: By using high quality products, which can be very well-known products of even bigger and few enterprises, they can influence greatly on the Mars. Grade: High.
• Buyers Power: Having premium products makes it too special or expensive for certain buyers in common stores. Grade: High.
• Rivalry Intensity: High fixed costs and high storage can increase competition. Nestle and Unilever are very important companies, best positioned than Mars and can attack whichever market niche that they want. Grade: Medium-High.

In conclusion, it is currently a difficult market and they cannot continue with the present strategy. Unless they change their current approach to the market and enhance their opportunities and strengths while diminishing their weaknesses, they will never make substantial profits.

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